On July 25th, Brazilian Entrepreneur, Arthur Machado, discussed the role of the State as an entrepreneurial agent in the open lecture "Entrepreneurship in a Conservative Culture: The Art of Swimming Against the Current". Being an innovator in the public sector and how entrepreneurs can cope with the challenges were some of the debates Machado and the public had in the class, held at Columbia Law School, in Columbia University (New York).
According to Machado, founder and CEO of Americas Trading Group, with extensive experience in corporate restructuring and financial markets, people in the public sector tend to think entrepreneurship is restricted to the private sector. The lack of an entrepreneur behavior from within the State, he argues, compromises the development of the markets, which, in consequence, compromises the culture of innovation: "Entrepreneurship requires a few pre-conditions, which can be summarized as a liberal and dynamic society; regulatory and institutional environment; and a selective view and criticism of society, from the perspective of the entrepreneur. From these three main requirements that an individual needs in order to become an entrepreneur, only one is under his/her control. To be an entrepreneur is not an isolated act. It depends on the stage of knowledge, institutional environment, availability of talent, economic mentality to invest, manufacturers’ network and capable users".
The lecturer stated that entrepreneurship can only succeed and become part of a society's culture with the presence of an Entrepreneurial State, which "should not only be responsive to market demands, but also help prepare an environment where capital can thrive in conditions conducive to the evolution of society. New solutions or improvements will not occur without the State´s support". Thus, the relationship between the State and economic activity, he believes, should not be circumstantial, but constructive.
Whereas Entrepreneurship is commonly associated with innovation in terms of creation, it also has a lot to do with destruction. "All creation is derived from an act of destruction. To be an entrepreneur is to be selective. You need to look at the amount of information available in society and select. The modern entrepreneur is a critical, selective person; is not an incrementalist, but a subtractor", says Machado. This process of creative destruction of existing structures, he explains, is facilitated by financing instruments, which reinforce the dynamism of capital and stimulates the development of new products, new production processes and new technologies.
In regards to the Brazilian context, Machado analyzed the country's stock market, its inefficiencies and its challenges to be a competitive player in the global scenario. "Brazilian capital markets still do not fulfill its role of connecting resource borrowers with investors, thus damaging the entire society. Brazil’s Stock Exchange charges five times higher than the international average and 27 times higher than US and UK, countries with strong competition", he states. According to the lecturer, though, the country's capital market has a great potential for growth and would benefit Brazilian society as a whole. To illustrate the latest moves in Brazil's stock market that present a competitive differential, Machado used American Trading System Brasil - a joint venture between Americas Trading Group (ATG) a NYSE Euronext - as a case study. The experience ATS Brasil's staff and executives have with major Brazilian capital market institutions, the better technology brought by international strategic partners to the Brazilian market and the distribution network (that already connects 32 of the country's largest brokers) are some of the competitive differentials from this new actor mentioned by Machado. Despite this prosperous perspective concerning ATS, "Brazil has a lot of regulatory loopholes that have to be addressed. As soon as the regulators decide to be open towards a perpetual adaptation of legislation in a way that targets progress, the better it will be for the Brazilian market", he concluded.
The open lecture was organized by Columbia Global Centers | Rio de Janeiro and Picker Center for Executive Education. It was attended by students from the Global Executive Master of Administration, a program offered by School of International and Public Affairs for international students through the Columbia Global Centers in Rio de Janeiro.
"As a regulator, avoid seeing like Christopher Columbus, who, when he left, did not know where he was going and when he arrived, did not know where he was."
Arthur Pinheiro Machado